Eastern Cape Provincial Planning and Treasury MEC Honourable Phumulo Masualle: Statement of commitments on improving audit outcomes
5 Nov 2012
Honourable Members of Executive Council,
The Auditor-General and his team: Mr Terence Nombembe
Let me take this opportunity to re-enforce the Honourable Premier in outlining government commitment to improving audit outcome. In doing so I must also convey a word of appreciation to the Office of The Auditor-General for keeping us on our toes in pursuit of accountable and clean administration for all levels of government. I am reminded that in August this year we were looking at the audit outcomes for local government.
A closer analysis of our performance indicates steady improvement in the audit outcome that to the improvement of audit outcomes, albeit such improvement is from a low base. I guess Hon. Speaker standing here today one has some sense of uneasiness because of the daunting task involved in turning around audits within a context of developing state. I am saying this because the ingredients for turning around audits such as leadership, internal controls supported by a committed cadre of professionals are always known but for some reason we continue to miss an opportunity of deploying these for the province to get the real benefits therefrom.
Hon Speaker on 8 December 2011 we stood before you and committed to a range of measures. Most of these measures have been implemented to get to the audit outcomes of the 2011/12 financial year, which show slow progress in terms of the number of departments and entities that received an unqualified audit. Qualitatively the outcomes remain concerning as regressions are noted in attaining clean audits, while the biggest chunk of our budget (88 per cent) remain on danger zone (qualified).
Some of the highlights on measures implemented include the placement of support capacity to departments of Health (five senior officials) and Education (initially four to sixteen officials in August 2011), while giving the two departments high priority in terms of engagements in the Executive Council and financial management public discourse.
From the perspective of building the oversight capacity in the province we are progressing well in setting up an effective internal audit function, while filling critical vacancies in Treasury. All departments established their dedicated internal audit units and appointed Audit Committees by August 2011. In July this year the Audit Committee Chairperson’s Forum was launched. In August 2011 the Head of the Department was appointed, allowing for re-organisation of skills within Treasury for better agility.
Hon. Speaker the question that begs an answer is why are these measures not reflecting in the audit outcomes. Our assessment, which takes a medium term view of impact, is that the measures we adopted are relevant and must continue. However, the resolve with which we implement some of the measures must change to reflect a sense of urgency, noting support interventions rely heavily on certain conditions of sustainability existing in departments. We are encouraged with the progress in getting the critical vacancies in the two departments filled as this is one of the areas that could have given impetus towards the impact we hoped to see.
Hon Speaker one area that remains Achilles' heel in the improving financial management in general and audit outcomes in particular is the reluctance to enforce accountability. If one analyses the audit results one would find a lot of repeat findings, indicating a lack of commitment in following up and resolving issues raised in previous audits.
Mostly the audit findings point to weak management systems. such as weak internal controls, lack of supervision, failure to observe laws regulating the state procurement, weak asset management, poor records management, poor planning and budget management. All these weaknesses should form the basic functions that leadership at the level of Accounting Officers should be able to manage. However, it is concerning that, for some reason, we seem to very tolerant for the existence of such weaknesses, more so if they continue to reflect repetitively in the audit reports.
In closing Hon. Speaker we commit to pursuing the issue of accountability with more vigour and continue with the commitment we made in December 2011, in particular the focused support to the Departments of Health and Education.
Issued by: Eastern Cape Provincial Treasury
5 Nov 2012
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